President William Ruto, on Friday, March 30, announced plans to remove Value Added Tax on exported services from June 2023.
While attending the American Chamber of Commerce Regional Business Summit in Nairobi, Ruto indicated that the change will be made via Parliament with lawmakers amending the Finance Act 2022.
"All verified tax refund claims will be repayable within 6 months. If it is okay to pay your taxes in time, it is okay to get your refunds in time," he added.
Notably, (VAT) treatment on the export of services from Kenya has long remained an issue of contention, according to the President. The VAT Act defines an exported service as used and consumed outside Kenya.
"One of the key challenges for our business community has been the VAT issue on exported services. This tax not only renders us uncompetitive, but it also inhibits investors seeking to make Kenya their regional or global services hub. Many companies are already operating out of Kenya and serving regional markets," Ruto declared.
On January 2023, the High Court dismissed a petition calling for the scrapping of VAT imposed on exported services.
The petition sought to have Section 30 of the Finance Act 2022 declared unconstitutional, and Kenya Revenue Authority (KRA) directed to refund any money collected through VAT on exported services.
Additionally, Ruto disclosed plans to introduce a new taxing policy by June 2023 to convince more foreigners to invest in Kenya.
"We are finalising a new tax guideline that will enhance transparency. It will be operational in June 2023 and be in place for three years," Ruto stated.
Furthermore, the head of state declared that the government will exempt start-ups from paying taxes on unrealised gains on employee-allocated shares starting July 1, 2023.
It will also review the Special Economic and Export Processing Zones laws to remove impediments to attracting new local and foreign investments. Furthermore, the 30 per cent domestic equity impeding large corporations from investing in Kenya will also be reviewed.
Ruto was joined by Trade Cabinet Secretary Moses Kuria, US ambassador to Kenya, Meg Whitman, and Prime Cabinet Secretary Musalia Mudavadi, alongside other leaders.
The president was lauded for his efforts to deepen the relations between the US and Kenya and champion the expansion of business opportunities.
"Relations between Kenya and the United States are strong and are only getting stronger," Kuria stated.
The CS further announced plans to work with various international companies to create opportunities for employment and boost trade.
